In an attempt to the break the impasse over its multi-billion Bangladesh investment, the Tata group today submitted a revised proposal, comprising greenfield steel, fertiliser, power and coal mining projects, to the Bangladesh Board of Investment.
According to the new plan, the Tatas have offered to buy natural gas in Bangladesh at $3.10 per thousand cubic feet, which is more than double the previous offer of $1.5 per thousand cubic feet.
While the price had gone up because of the product-linked gas pricing formula, the required sovereign guarantee period for gas supply has come down to 10 years, said Mahmudur Rehman, executive chairman of the Board of Investment.
The investment plan now stands revised from $2.5 billion to $3 billion. The other key elements of the revised proposal include the offer of a joint venture with the government of Bangladesh and the listing of its business ventures in the country's stock exchanges.
The joint venture provides the government of Bangladesh the option of 10 per cent equity participation in all projects undertaken by the Tatas.
The Tatas have requested the Bangladesh government to take a final decision by the end of May so that the final agreement can be signed by July.
The Tatas want to set up a steel plant with annual production capacity of 2.4 million tonnes, a urea factory with a capacity of 1 million tonnes, a 500 Mw coal-fired power station and a 1,000 Mw gas-fired power plant.
The Tatas will require 200 million cubic feet of gas per day, officials said. The country has 14 trillion cubic feet of gas reserves, according to energy ministry estimates.
Energy officials also said the domestic price for natural gas was currently more than $2 per thousand cubic feet.
The proposal also gives details of how the group would implement its commitment to corporate social responsibility in these projects, including the setting up of two hospitals and three technical training institutes near the plant sites.
"Bangladesh continues to be a focus market for the Tata group's international expansion plans. We are hopeful that our revised proposal meets the concerns raised by the Bangladesh negotiation team," said Alan Rosling, executive director, Tata Sons.
Negotiations of the key terms of these projects commenced last year and have now entered the final stages with the submission of this comprehensive package, which addresses issues of gas prices, fiscal incentives and coal mining.Do you want to discuss stock tips? Do you know a hot one? Join the Stock Market Investments Discussion Group
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